We’ve
mentioned here that something’s afoot in Washington regarding
intellectual property rights: Obama has appointed an IP “czar”
(them damn socialists, again), the Department of Justice is
beefing up its IP enforcement section, and there’s some secret
international treaty being negotiated. And while there hasn’t
been much overt activity on any of these fronts yet, all of
these things appear to be happening at least in part at the
urging and with the support of corporate media companies.
The buzzwords in the cacophony of corporate talking points
are things like “stricter enforcement” and “digital piracy,”
and this stuff is endlessly repeated to us blithely as real
news by the mainstream media. We hear that “piracy” is costing
us X billions of lost sales and X thousand lost jobs. Well,
freakin’ yikes. We’d better do something, right?

Well, maybe not. Maybe it’s all a bunch of, um, hokum. The
problem is that mainstream media outlets are owned by the
same corporations that are hammering Washington with these
arguments, so you’re not gonna hear any skepticism about this
on television or read about it in the newspaper. The fact
is that very few people analyze, question, or ask if we really
need stricter IP enforcement, or inquire what it will cost
us in terms of consumer choice, consumer cost and especially,
personal privacy.

The “statistics” about “piracy”-related lost sales and lost
jobs have always been a little suspect.

The federal General Accountability Office, the above-reproach
research arm of Congress, was directed to look into the effects
of intellectual property piracy and counterfeiting, and last
week issued its report. (You can look at it at gao.gov/ new.items/d10423.pdf)
Guess what it found:

The GAO found that the numbers are all made up! Now, this
is a short but rambling report, a survey and analysis of the
information that’s out there about “counterfeiting” and “piracy.”
It also covers a bewildering expanse of territory, talking
about things like counterfeit pharmaceuticals, airplane parts,
circuit boards, handbags, CDs and DVDs along with digital
downloading. As such, it doesn’t really go very deep into
anything, but the general finding is that we’ve all been getting
a snow job.

The report found that the basic raw data used for these estimates
is of questionable origin, and that the assumptions used to
extrapolate that data are not supportable. One of the most
ridiculous assumptions, that one “illicitly” acquired good
equals one lost sale, was singled out for inflating the estimates
to multiples of what they should be. The “one-to-one substitution”
assumption has long been used by the music, movie, and software
industries in describing their losses from people acquiring
free copies of stuff over the Internet, and it’s the height
of absurdity: Every song we grab for free online somewhere
is a song we would have paid a dollar for if it weren’t available
for free? Of course not. It’s a small fraction of that. But
industry takes questionable and inflated numbers about, say,
how many songs are shared over the Internet, multiplies that
number by 99 cents, and says, here, we’re losing billions
and billions of dollars! The media uncritically repeats this
nonsense and we all believe it.

Even more amusing is the GAO’s take on the federal government’s
use of these bogus statistics:

“A
number of industry, media, and government publications have
cited an FBI estimate that U.S. businesses lose $200-$250
billion to counterfeiting on an annual basis. . . . FBI officials
told us that it has no record of source data or methodology
for generating the estimate and that it cannot be corroborated.
A 2002 CBP press release contained an estimate that U.S. businesses
and industries lose $200 billion a year in revenue and 750,000
jobs due to counterfeits of merchandise. . . . A CBP official
stated that these figures are of uncertain origin, have been
discredited, and are no longer used by CBP. A March 2009 CBP
internal memo was circulated to inform staff not to use the
figures. However, another entity within DHS continues to use
them . . .”

Yeow! The GAO essentially concludes that while piracy and
counterfeiting is indeed a problem, it’s really impossible
to know how much of a problem it is, and that at least for
digital downloading, the estimates tossed around by both industry
and government are wildly overstated. In fact, it’s pointed
out that the availability of free digital media online may
have significant positive effects in the form of consumer
sampling, free promotion, and the tempering of monopoly pricing.